Invoking self-reliant India, government bans import of 101 defence items

MoD aims at manufacturing Rs 4 trillion worth of defence goods in next 6-7 years

 

By Ajai Shukla

Business Standard, 10th Aug 20

 

Invoking Prime Minister Narendra Modi’s Atmanirbhar Bharat (Self-Reliant India) initiative, the Ministry of Defence (MoD) announced on Sunday a phased, year-wise embargo on the import of 101 items of defence equipment. As an equipment type comes under the import embargo, the military will be required to buy it from Indian defence manufacturers.

 

“This decision will offer a great opportunity to the Indian defence industry to manufacture the items in the negative list by using their own design and development capabilities or adopting the technologies designed and developed by DRDO (Defence R&D Organisation) to meet the requirements of the Armed Forces,” tweeted Defence Minister Rajnath Singh.

 

Modi endorsed the new export embargoes from his own Twitter account shortly afterwards.

 

“The embargo on imports is planned to be progressively implemented between 2020 and 2024. Our aim is to apprise the Indian defence industry about the anticipated requirements of the Armed Forces so that they are better prepared to realise the goal of indigenization,” said the defence minister.

 

Starting from December, the military will rely exclusively on indigenous vendors for 69 categories of defence equipment, including self-propelled and towed artillery guns, multi-barrelled rocket launchers, bulletproof jackets and helmets, several types of warships, light transport aircraft, light combat fighter aircraft, light combat helicopters and ground transport vehicles.

 

In fact, the military already buys these equipment types mainly from Indian manufacturers. However, the new policy formalises those arrangements.

 

With effect from December 2021, the military will have to buy another 11 types of equipment, including wheeled tanks, light machine guns, assault rifles and conventional submarines from Indian manufacturers.

 

Another 21 categories of equipment would have to be sourced only from Indian suppliers from cut-off dates ranging from December 2022 (four equipment types), December 2023 (eight types) and December 2024 (eight types). Additionally, the MoD has mandated that long-range cruise missiles must be bought from indigenous suppliers from December 2025 onwards.

 

The MoD gave three examples of “highly complex weapons platforms” on the list of 101 embargoed items, which add up to Rs 132,000 crore. The army will buy 200 wheeled armoured fighting vehicles for over Rs 5,000 crore, since their import is embargoed after December 2021. 

 

With the import of submarines embargoed after December 2021, the navy will contract six for approximately Rs 42,000 crore. The air force will by approximately 123 Tejas fighters for approximately Rs 85,000 crore, since their import is banned after December. 

 

Rajnath tweeted that, in the five years between April 2015 and August 2020, the military bought equipment worth Rs 350,000 crore in these 101 categories. He estimated that, within the next 6-7 years contracts worth almost Rs 400,000 crore will be placed upon the domestic industry.

 

“Of these, items worth almost Rs 1,30,000 crore each are anticipated for the army and the air force while items worth almost Rs 1,40,000 crore are anticipated by the navy over the same period,” said Rajnath.

 

However, these figures suggest domestic purchases in these categories are set to go down, not to rise. Between 2015-20, the average purchase each year adds up to about Rs 70,000 crore. Over the next 6-7 years, the annual average would fall to Rs 61,500 crore.

 

“MoD has also bifurcated the capital procurement budget for 2020-21 between domestic and foreign capital procurement routes. A separate budget head has been created with an outlay of nearly Rs 52,000 crore for domestic capital procurement in the current financial year,” stated the defence minister.

 

Both the draft Defence Production and Export Promotion Policy 2020 (released for public comment on Aug 3) and the draft Defence Acquisition Procedure of 2020 (released on July 28) undertake to issue a list of import-embargoed weapons with year-wise timelines.

 

Indicating that all stakeholders were on board the new policy, Rajnath tweeted: “The list is prepared by MoD after several rounds of consultations with all stakeholders, including the Armed Forces, public and private industry to assess current and future capabilities of the Indian industry for manufacturing various ammunition and equipment within India.”

 

To help Indian suppliers develop the capability to manufacture and supply defence equipment that comes under the rolling import embargo, the MoD has pledged a “co-ordinated mechanism for hand holding of the industry by the defence services.”

 

While the negative list initially covers 101 types of defence equipment, “More such equipment for import embargo would be identified progressively by the Department of Military Affairs in consultation with all stakeholders,” tweeted Rajnath Singh.